EX-99.1 2 roic-063018xpressreleasexe.htm EXHIBIT 99.1 Exhibit
Retail Opportunity Investments Corp.                 TRADED: NASDAQ: ROIC
11250 El Camino Real, Suite 200
San Diego, CA 92130        

FOR IMMEDIATE RELEASE
Wednesday, July 25, 2018

Retail Opportunity Investments Corp. Reports
2018 Second Quarter Results
San Diego, CA, July 25, 2018 - Retail Opportunity Investments Corp. (NASDAQ:ROIC) announced today financial and operating results for the three and six months ended June 30, 2018.
HIGHLIGHTS
▪$7.3 million of net income attributable to common stockholders ($0.06 per diluted share)
▪$33.4 million of Funds From Operations(1) ($0.27 per diluted share)
▪97.5% portfolio lease rate at June 30, 2018
▪20.4% increase in same-space comparative cash rents on new leases (7.6% on renewals)
▪2.8% increase in same-center cash net operating income (2Q’18 vs. 2Q’17)
▪$15.7 million grocery-anchored shopping center acquired
▪$0.1950 per share quarterly cash dividend paid
__________________________
(1) A reconciliation of GAAP net income to Funds From Operations (FFO) is provided at the end of this press release.
Stuart A. Tanz, President and Chief Executive Officer of Retail Opportunity Investments Corp. stated, “During the second quarter, demand for space across our portfolio continued to be strong, coming from a broad range of necessity-based retailers. We continued to maintain our portfolio at over 97% leased, ending the second quarter specifically at a strong, 97.5%. Additionally, for the 26th consecutive quarter, we achieved growth in our key same-center and same-space comparative operating metrics. During the second quarter, we grew same-center cash NOI by 2.8% and achieved a 20.4% increase in same-space cash rents on new leases.” Tanz added, “Looking ahead, with the current leasing activity and momentum across our portfolio, we are on track to continue achieving solid portfolio operational results as we progress through the second half of 2018.”
FINANCIAL SUMMARY
For the three months ended June 30, 2018, GAAP net income attributable to common stockholders was $7.3 million, or $0.06 per diluted share, as compared to GAAP net income attributable to common stockholders of $8.3 million, or $0.08 per diluted share, for the three months ended June 30, 2017. For the six months ended June 30, 2018, GAAP net income attributable to common stockholders was $18.0 million, or $0.16 per diluted share, as compared to GAAP net income attributable to common stockholders of $18.5 million, or $0.17 per diluted share, for the six months ended June 30, 2017.

FFO for the second quarter of 2018 was $33.4 million, or $0.27 per diluted share, as compared to $32.8 million in FFO, or $0.27 per diluted share for the second quarter of 2017. FFO for the first six months of 2018 was $70.5 million, or $0.57 per diluted share, as compared to $67.2 million in FFO, or $0.55 per diluted share for the first six months of 2017.


ROIC reports FFO as a supplemental performance measure in accordance with the definition set forth by the National Association of Real Estate Investment Trusts. A reconciliation of GAAP net income to FFO is provided at the end of this press release.

At June 30, 2018, ROIC had a total market capitalization of approximately $3.9 billion with approximately $1.5 billion of principal debt outstanding, equating to a 39.3% debt-to-total market capitalization ratio. ROIC’s principal debt outstanding was comprised of $95.8 million of mortgage debt and approximately $1.4 billion of unsecured debt, including $192.0 million outstanding on its unsecured revolving credit facility at June 30, 2018. ROIC’s interest coverage for the second quarter was 3.1 times and 93.6% of its portfolio was unencumbered at June 30, 2018 (based on gross leasable area).
ACQUISITION SUMMARY
Year-to-date in 2018, ROIC has acquired a total of $38.7 million of shopping center assets. During the first quarter of 2018, ROIC acquired a grocery-anchored shopping center for $19.0 million. During the second quarter of 2018, ROIC acquired a grocery-anchored shopping center for $15.7 million. Additionally, during the second quarter, ROIC acquired a multi-tenant, freestanding pad for $4.0 million located at one of its existing grocery-anchored shopping centers.
King City Plaza
In May 2018, ROIC acquired King City Plaza for $15.7 million. The shopping center is approximately 63,000 square feet and is anchored by Grocery Outlet Supermarket and McCann’s Pharmacy. The property is located in King City, Oregon, within the Portland metropolitan area, and is currently 100% leased.
PROPERTY OPERATIONS SUMMARY
At June 30, 2018, ROIC’s portfolio was 97.5% leased. For the second quarter of 2018, same-center net operating income (NOI) was $44.5 million, as compared to $43.2 million in same-center NOI for the second quarter of 2017, representing a 2.8% increase. ROIC reports same-center comparative NOI on a cash basis. A reconciliation of GAAP operating income to same-center comparative NOI is provided at the end of this press release.
During the second quarter of 2018, ROIC executed 97 leases, totaling 265,743 square feet, including 42 new leases, totaling 98,669 square feet, achieving a 20.4% increase in same-space comparative base rent, and 55 renewed leases, totaling 167,074 square feet, achieving a 7.6% increase in base rent. ROIC reports same-space comparative base rent on a cash basis.
CASH DIVIDEND
On June 28, 2018, ROIC distributed a $0.1950 per share cash dividend. On July 25, 2018, ROIC’s board of directors declared a cash dividend of $0.1950 per share, payable on September 27, 2018 to stockholders of record on September 13, 2018.
CONFERENCE CALL
ROIC will conduct a conference call and audio webcast to discuss its results on Thursday, July 26, 2018 at 9:00a.m. Eastern Time / 6:00 a.m. Pacific Time. Those interested in participating in the conference call should dial (877) 312-8783 (domestic), or (408) 940-3874 (international) at least ten minutes prior to the scheduled start of the call. When prompted, provide the Conference ID: 1890648. A live webcast will also be available in listen-only mode at http://www.roireit.net/. The conference call will be recorded and available for replay beginning at 12:00 p.m. Eastern Time on July 26, 2018 and will be available until 12:00a.m. Eastern Time on August 2, 2018. To access the conference call recording, dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and use the Conference ID: 1890648. The conference call will also be archived on http://www.roireit.net/ for approximately 90 days.


ABOUT RETAIL OPPORTUNITY INVESTMENTS CORP.
Retail Opportunity Investments Corp. (NASDAQ: ROIC), is a fully-integrated, self-managed real estate investment trust (REIT) that specializes in the acquisition, ownership and management of grocery-anchored shopping centers located in densely-populated, metropolitan markets across the West Coast.  As of June 30, 2018, ROIC owned 92 shopping centers encompassing approximately 10.6 million square feet.  ROIC is the largest publicly-traded, grocery-anchored shopping center REIT focused exclusively on the West Coast.  ROIC is a member of the S&P SmallCap 600 Index and has investment-grade corporate debt ratings from Moody's Investor Services and Standard & Poor's.  Additional information is available at: www.roireit.net.

When used herein, the words "believes," "anticipates," "projects," "should," "estimates," "expects," “guidance” and similar expressions are intended to identify forward-looking statements with the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21F of the Securities and Exchange Act of 1934, as amended. Certain statements contained herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results of ROIC to differ materially from future results expressed or implied by such forward-looking statements. Information regarding such risks and factors is described in ROIC's filings with the SEC, including its most recent Annual Report on Form 10-K, which is available at: www.roireit.net.




RETAIL OPPORTUNITY INVESTMENTS CORP.
Consolidated Balance Sheets
(In thousands, except share data)
 
June 30, 2018
(unaudited)
 
December 31, 2017
ASSETS
 

 
 

Real Estate Investments:
 

 
 

Land
$
898,436

 
$
878,797

Building and improvements
2,265,760

 
2,230,600

 
3,164,196

 
3,109,397

Less:  accumulated depreciation
295,602

 
260,115

Real Estate Investments, net
2,868,594

 
2,849,282

Cash and cash equivalents
10,958

 
11,553

Restricted cash
1,420

 
5,412

Tenant and other receivables, net
42,095

 
43,257

Deposits
—

 
500

Acquired lease intangible assets, net
78,246

 
82,778

Prepaid expenses
1,600

 
2,853

Deferred charges, net
36,150

 
37,167

Other
10,606

 
6,396

Total assets
$
3,049,669

 
$
3,039,198

 
 
 
 
LIABILITIES AND EQUITY
 

 
 

Liabilities:
 

 
 

Term loan
$
298,942

 
$
298,816

Credit facility
189,259

 
140,329

Senior Notes
940,762

 
940,086

Mortgage notes payable
97,884

 
107,915

Acquired lease intangible liabilities, net
173,911

 
178,984

Accounts payable and accrued expenses
14,580

 
18,638

Tenants’ security deposits
6,997

 
6,771

Other liabilities
18,213

 
18,018

Total liabilities
1,740,548

 
1,709,557

 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
Equity:
 

 
 

Preferred stock, $0.0001 par value 50,000,000 shares authorized; none issued and outstanding
—

 
—

Common stock, $0.0001 par value, 500,000,000 shares authorized; 112,719,459 and 112,347,451 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively
11

 
11

Additional paid-in capital
1,415,286

 
1,412,590

Dividends in excess of earnings
(236,570
)
 
(210,490
)
Accumulated other comprehensive income
7,235

 
1,856

Total Retail Opportunity Investments Corp. stockholders’ equity
1,185,962

 
1,203,967

Non-controlling interests
123,159

 
125,674

Total equity
1,309,121

 
1,329,641

Total liabilities and equity
$
3,049,669

 
$
3,039,198

 
 
 
 


RETAIL OPPORTUNITY INVESTMENTS CORP.
Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Revenues
 
 
 
 
 

 
 

Base rents
$
55,050

 
$
50,528

 
$
110,427

 
$
102,007

Recoveries from tenants
16,471

 
15,222

 
32,632

 
28,890

Other income
820

 
890

 
3,677

 
1,643

Total revenues
72,341

 
66,640

 
146,736

 
132,540

 
 
 
 
 
 
 
 
Operating expenses
 
 
 
 
 
 
 
Property operating
11,017

 
9,628

 
21,495

 
18,928

Property taxes
7,914

 
7,647

 
15,733

 
14,715

Depreciation and amortization
25,331

 
23,645

 
50,548

 
46,703

General and administrative expenses
3,990

 
3,817

 
7,521

 
7,316

Acquisition transaction costs
—

 
4

 
—

 
4

Other expense
274

 
225

 
343

 
274

Total operating expenses
48,526

 
44,966

 
95,640

 
87,940

 
 
 
 
 
 
 
 
Operating income
23,815

 
21,674

 
51,096

 
44,600

Non-operating expenses
 
 
 
 
 

 
 

Interest expense and other finance expenses
(15,713
)
 
(12,477
)
 
(31,170
)
 
(24,152
)
Net income
8,102

 
9,197

 
19,926

 
20,448

Net income attributable to non-controlling interests
(763
)
 
(888
)
 
(1,885
)
 
(1,969
)
Net Income Attributable to Retail Opportunity Investments Corp.
$
7,339

 
$
8,309

 
$
18,041

 
$
18,479

 
 
 
 
 
 
 
 
Earnings per share – basic and diluted
$
0.06

 
$
0.08

 
$
0.16

 
$
0.17

 
 
 
 
 
 
 
 
Dividends per common share
$
0.1950

 
$
0.1875

 
$
0.3900

 
$
0.3750

 
 
 
 
 
 
 
 





CALCULATION OF FUNDS FROM OPERATIONS
(Unaudited)
(In thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
Net income attributable to ROIC
$
7,339

 
$
8,309

 
$
18,041

 
$
18,479

Plus:  Depreciation and amortization
25,331

 
23,645

 
50,548

 
46,703

Funds from operations – basic
32,670

 
31,954

 
68,589

 
65,182

Net income attributable to non-controlling interests
763

 
888

 
1,885

 
1,969

Funds from operations – diluted
$
33,433

 
$
32,842

 
$
70,474

 
$
67,151

 
 
 
 
 
 
 
 

SAME-CENTER CASH NET OPERATING INCOME ANALYSIS
(Unaudited)
(In thousands, except number of shopping centers and percentages)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2018
 
2017
 
$ Change
 
% Change
 
2018
 
2017
 
$ Change
 
% Change
Number of shopping centers included in same-center analysis
82

 
82

 
 
 
 
 
79

 
79

 
 
 
 
Same-center occupancy
97.3
%
 
97.4
%
 
 
 
(0.1
)%
 
97.4
%
 
97.5
%
 
 
 
(0.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Base rents
$
46,229

 
$
44,666

 
$
1,563

 
3.5
 %
 
$
89,342

 
$
86,911

 
$
2,431

 
2.8
 %
 
Percentage rent
91

 
187

 
(96
)
 
(51.3
)%
 
176

 
302

 
(126
)
 
(41.7
)%
 
Recoveries from tenants
15,181

 
14,985

 
196

 
1.3
 %
 
28,861

 
28,183

 
678

 
2.4
 %
 
Other property income
789

 
897

 
(108
)
 
(12.0
)%
 
1,089

 
1,655

 
(566
)
 
(34.2
)%
Total Revenues
62,290

 
60,735

 
1,555

 
2.6
 %
 
119,468

 
117,051

 
2,417

 
2.1
 %
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property operating expenses
10,312

 
9,805

 
507

 
5.2
 %
 
19,418

 
18,322

 
1,096

 
6.0
 %
 
Bad debt expense
276

 
255

 
21

 
8.2
 %
 
364

 
743

 
(379
)
 
(51.0
)%
 
Property taxes
7,252

 
7,449

 
(197
)
 
(2.6
)%
 
13,769

 
14,134

 
(365
)
 
(2.6
)%
Total Operating Expenses
17,840

 
17,509

 
331

 
1.9
 %
 
33,551

 
33,199

 
352

 
1.1
 %
Same-Center Cash Net Operating Income
$
44,450

 
$
43,226

 
$
1,224

 
2.8
 %
 
$
85,917

 
$
83,852

 
$
2,065

 
2.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




SAME-CENTER CASH NET OPERATING INCOME RECONCILIATION
(Unaudited)
(In thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2018
 
2017
 
2018
 
2017
GAAP operating income
$
23,815

 
$
21,674

 
$
51,096

 
$
44,600

Depreciation and amortization
25,331

 
23,645

 
50,548

 
46,703

General and administrative expenses
3,990

 
3,817

 
7,521

 
7,316

Acquisition transaction costs
—

 
4

 
—

 
4

Other expense
274

 
225

 
343

 
274

Property revenues and other expenses (1)
(4,441
)
 
(4,311
)
 
(9,924
)
 
(11,201
)
Total Company cash NOI
48,969

 
45,054

 
99,584

 
87,696

Non same-center cash NOI
(4,519
)
 
(1,828
)
 
(13,667
)
 
(3,844
)
Same-center cash NOI
$
44,450

 
$
43,226

 
$
85,917

 
$
83,852

 
 
 
 
 
 
 
 
____________________
(1)
Includes straight-line rents, amortization of above and below-market lease intangibles, anchor lease termination fees, net of contractual amounts, and expense and recovery adjustments related to prior periods.

NON-GAAP DISCLOSURES
Funds from operations (“FFO”), is a widely recognized non-GAAP financial measure for REITs that the Company believes when considered with financial statements presented in accordance with GAAP, provides additional and useful means to assess its financial performance. FFO is frequently used by securities analysts, investors and other interested parties to evaluate the performance of REITs, most of which present FFO along with net income as calculated in accordance with GAAP. The Company computes FFO in accordance with the “White Paper” on FFO published by the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net income attributable to common stockholders (determined in accordance with GAAP) excluding gains or losses from debt restructuring, sales of depreciable property and impairments, plus real estate related depreciation and amortization, and after adjustments for partnerships and unconsolidated joint ventures.
The Company uses cash net operating income (“NOI”) internally to evaluate and compare the operating performance of the Company’s properties. The Company believes cash NOI provides useful information to investors regarding the Company’s financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level, and when compared across periods, can be used to determine trends in earnings of the Company’s properties as this measure is not affected by the non-cash revenue and expense recognition items, the cost of the Company’s funding, the impact of depreciation and amortization expenses, gains or losses from the acquisition and sale of operating real estate assets, general and administrative expenses or other gains and losses that relate to the Company’s ownership of properties. The Company believes the exclusion of these items from operating income is useful because the resulting measure captures the actual revenue generated and actual expenses incurred in operating the Company’s properties as well as trends in occupancy rates, rental rates and operating costs. Cash NOI is a measure of the operating performance of the Company’s properties but does not measure the Company’s performance as a whole and is therefore not a substitute for net income or operating income as computed in accordance with GAAP. The Company defines cash NOI as operating revenues (base rent and recoveries from tenants), less property and related expenses (property operating expenses and property taxes), adjusted for non-cash revenue and operating expense items such as straight-line rent and amortization of lease intangibles, debt-related expenses and other adjustments. Cash NOI also excludes general and administrative expenses, depreciation and amortization, acquisition transaction costs, other expense, interest expense, gains and losses from property acquisitions and dispositions, extraordinary items, tenant improvements and leasing commissions. Other REITs may use different


methodologies for calculating cash NOI, and accordingly, the Company’s cash NOI may not be comparable to other REITs.

Contact:
Ashley Rubino, Investor Relations
858-255-4913
arubino@roireit.net